Company Law Question Paper

Company Law

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2011

BBA 401
COMPANY LAW
8TH APRIL 2011
INSTRUCTIONS: Answer question one and any other two

QUESTION ONE

City Acre Limited was incorporated in 2008. The directors of the company who were also the shareholders are Aden and Bill who own the company's shares equally.

In 2009 the company borrowed 1 million from Bidii Bank which the directors used to purchase a car for their own use.

Between 2008 and 2010 Chali supplied the company with its raw materials and KSH 500000 is still unpaid.

Although Aden and Bill are the listed directors, the real running of the company and decision making is not done by them. Last year it was discovered tat the company was unable to pay its debts.

Discuss

a) The liability of the directors if any. (10marks)
b) The type of winding up that would be most appropriate and why?(6marks)
c) Other than the facts stated above, what other grounds can lead to winding up of a company under section 5:219 of the companies ACT.(14marks)

QUESTION TWO

a) ''While every person who deals with the company is deemed to know the contents of the Memorandum of Association and the Articles of Association, persons outside the company are entitled to assume that any internal procedures required for purposes of validating of action of the company has been complied with. Discuss the above statement in light of Companies Act Cap 486.(15marks)

b) Discuss five principal differences between a public limited company and private limited company as outlined by the companies ACT.(5marks)

QUESTION THREE

a) Though the certificate of incorporation is conclusive for purposes of incorporation, using decided cases, outline circumstances under which it could be withdrawn.(15marks)

b) Outline the effects of ultravires Actions.(5marks)

QUESTION FOUR

''Shareholders are distinct from the company.'' Discuss this statement while outlining any legal and economic effects and any exceptions therein.(20marks)

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